Nationally Significant Infrastructure Projects - related housing

From today an element of housing may be included in development consent orders (DCOs) for nationally significant infrastructure projects (NSIPs) under the Planning Act 2008.

Section 160 of the Housing and Planning Act 2016 amends the Planning Act 2008 to allow "related housing development" to be consented as part of a DCO for an NSIP.

The change applies in England only. Housing may be consented as part of a DCO in two circumstances:

Where the housing is in geographical proximity to a NSIP ("on the same site as, or is next to or close to, any part of the development")

Where the housing is required to meet a functional need ("development which… is otherwise associated with that development (or any part of it")

The 2016 Act left the detail of the circumstances where housing will be acceptable to guidance published by the Secretary of State. The Secretary of State must have regard to that guidance in deciding an application that includes related housing development .

What does this mean for promoters of NSIPs?

Applicants for development consent made on or after 6 April may, if they wish, include an element of housing in their application. Applicants wishing to include housing would of course need to factor this into their project consultation and application programmes. While that may have a short term impact on the project programme there may be positive impacts on scheme viability that favour the inclusion of an element of housing with a DCO.

Can a DCO be granted for stand-alone housing?

The position remains that a DCO can only be made for an NSIP as defined in the 2008 Act or development which is directed into the regime under Section 35 Planning Act 2008. A housing scheme cannot be directed into the 2008 Act process, so any related housing included in a DCO is essentially parasitic on the NSIP.

The government has not limited the categories of NSIP that may include related housing; so any category of NSIP, and any that are directed into the regime under Section 35 Planning Act 2008, may include an element of related housing development.

The success rate for DCO applications is very high – will that still apply for related housing?

If development consent is not granted for the NSIP then the related housing will also be refused consent.

The reverse does not apply: the Guidance makes it clear that the Secretary of State may grant the DCO for the NSIP but refuse consent for some or all of the housing.

How much housing can be included with a DCO?

The Guidance states maximum amount of housing that should be sought under a DCO is 500 dwellings for a single NSIP. This limit has been set to avoid undermining the local planning process and the wider responsibilities for local authorities to plan for housing need in their area.

However the Guidance does appear to leave the door very slightly ajar to larger applications in two circumstances:

based on geographical proximity, since it states that "it is very unlikely that the Secretary of State will consent more than 500 dwellings". This stops short of an absolute prohibition, however such an application would be likely to face major obstacles and would therefore be a risky strategy for a developer to pursue

based on functional need where more than 500 units are required for the construction phase but this is subsequently to be converted to 500 units or fewer.

Where can the housing be located?

If the justification for the related housing is geographical proximity to the NSIP then it must be "on the same site, next to or close to" any part of the NSIP. The Guidance states that "close to" means "up to 1 mile away" from the NSIP. The Guidance makes it clear the distance is measured from the NSIP and not any associated development.

If the justification is functional need, the expectation is that the housing will be close to the NSIP. However the Guidance states that where a large amount of housing for construction workers is proposed it may be more appropriate and sustainable overall for this to be provided in a local town with better access to local services and facilities, provided that it is within reasonable commuting distance of the NSIP.

How will the related housing element of the DCO be examined?

The related housing element will be assessed through the DCO examination process, but will be carefully examined in its own right to ensure that the housing proposed is acceptable in planning terms.

As a minimum the Examining Authority must consider:

the justification for any functional need housing

the amount of housing proposed

the location of the housing.

How will the related housing element be assessed?

The related housing element must be assessed by the Examining Authority against the policies set out in the NPPF and supporting planning guidance. The development plan "may also be relevant" to the Examining Authority in assessing the housing proposals.

However the Guidance appears to gives the Secretary of State more flexibility by stating that these policies are "likely to be an important and relevant consideration for the Secretary of State" when reaching a decision on the related housing.

In areas where there are restrictions on housing in sensitive locations such as the Green Belt, AONBs, SSSIs, designated heritage assets and even local green space, a lower number of dwellings, or no housing at all, is likely to be appropriate.

The Guidance also reminds local authorities that their local impact report (LIR) must be taken into account, and encourages them to submit an LIR to ensure that the impacts on local housing markets and supply can be fully considered.

Will affordable housing have to be provided?

Where there is no functional need, and consent is granted on the basis of geographical proximity, a percentage of affordable housing must be included in the application in accordance with local plan policy and secured using Section 106 planning obligations.

If the promoter is not the landowner of the proposed housing site, binding the land by Section 106 may prove difficult. Use of the DCO itself to create an obligation to enter into a Section 106 Agreement may be one way to demonstrate that the land will be bound.

Will the new power be used?

Adding related housing to an NSIP is a positive step and has the potential to be attractive to infrastructure promoters and housing developers.

Combining infrastructure and related housing may mean that some of the value added to land by an infrastructure project is captured by the promoter and not lost to the wider market.

There may also be situations where proper integration of an NSIP and related housing gives mutual benefit –for instance the provision of heating to housing from a generating station.

Using the NSIP process provides compulsory acquisition powers that might unlock housing development sites that have not otherwise come to market.

But housing developers will be less familiar with this consenting route. The DCO system is quite different to applications made under the Town and Country Planning Act. The frontloading and consultation required before submission may put off mainstream housing developers. The process can also be costly, so developers and the risks involved in pursuing applications need to be properly evaluated.

Because the housing element of the application is reliant on the NSIP, a housing developer may put a great deal of effort into securing development consent for the related housing element of a scheme, and successfully make out their case for the housing, only to see the related housing refused on the basis that development consent for the NSIP is refused.

Housing developments will often go through a variety of iterations via a series of permissions under Sections 73 and 96A of the Town and Country Planning Act 1990, but the 2008 Act has no corresponding power. A material amendment to a DCO requires engagement with the time consuming and bureaucratic procedure in Schedule 6 of the Planning Act 2008.

Finally, DCO's are also subject to an unusually inflexible enforcement regime where a breach immediately gives rise to a criminal offence. It remains to be seen how prospective purchasers of the housing and their lenders will react to this Draconian sanction

A challenge has been laid down to those promoting and drafting DCOs to try to soften these negative effects, but in practice it would not seem be possible to circumvent them entirely without further legislative intervention. Overall therefore, it is expected the take up of the power will be limited and until the number of housing units is increased, or removed, the full benefit of Section 160 will not be realised.

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